Raising guidance for full year 2012 earnings to a range of $3.85 to
$4.00 per diluted share, an increase of 20% to 25% over 2011 based on
expected full year 2012 sales growth of 10% to 13%.

April 18, 2012 06:00 AM Eastern Daylight Time

MINNEAPOLIS--(BUSINESS WIRE)--Polaris Industries Inc. (NYSE: PII) today reported record first quarter
net income of $60.1 million, or $0.85 per diluted share, for the quarter
ended March 31, 2012. By comparison, 2011 first quarter net income was
$47.3 million, or $0.67 per diluted share. Net sales for the first
quarter 2012 totaled $673.8 million, an increase of 25 percent from last
year’s first quarter sales of $537.2 million.

“Our record first quarter results reflect not only the continued
strength of our business and solid execution of our strategy, but also a
healthy start to the year for our end markets,” commented Scott Wine,
Polaris’ Chief Executive Officer. “Retail sales in the North American
off-road vehicle and motorcycle industries are off to their best start
in years, and through our innovative products and motivated dealers,
Polaris continued to gain market share. We have significant work to do,
but as momentum built throughout the first quarter, we gained confidence
that 2012 will be another record year for Polaris, as indicated by our
increased full year sales and earnings guidance.”

“Sales increased 25 percent during the first quarter 2012, driven by
robust sales of our Off-Road Vehicles and motorcycles. Customer demand
for our broad array of RANGER® and RANGER RZR®
side-by-side vehicles continues to exceed our expectations, both in
North America and our international markets. Our international sales,
which include the recent acquisition of Goupil, grew 20 percent for the
quarter in spite of the continuing EU economic uncertainty. We are well
positioned to meet this higher demand, as we have increased production
at our Minnesota, Iowa and Wisconsin plants, while our Monterrey, Mexico
plant continues to raise production levels. In addition, North American
dealer inventories remain in line with our previous projections, with
decreased ATV inventory year over year and increased side-by-side
vehicle dealer inventory to meet the higher demand. Season-end
snowmobile dealer inventory is higher than a year ago due to the poor
snowfall, but remains at manageable levels.”

“Looking ahead, strong retail demand in the first quarter and our
expectations for the remainder of the year underscores our confidence in
raising our full year 2012 guidance for sales and earnings,” continued
Wine. “Cash flow is expected to remain strong and our balance sheet
remains solid with $286 million of cash on hand and minimal debt.
Additionally, we are realizing the expected savings from our
manufacturing realignment project, which provides support to our ongoing
margin expansion efforts. Given our excellent start, and despite
continued caution about the economy in the second half of the year and
particularly the fourth quarter, we believe 2012 is shaping up to be
another record year for Polaris.”

2012 Business OutlookBased on Polaris’ performance during
the 2012 first quarter and projections for the remainder of the year,
the Company is increasing its 2012 full year sales and earnings
guidance. The Company now expects full year 2012 earnings to be in the
range of $3.85 to $4.00 per diluted share, an increase of 20 to 25
percent over earnings of $3.20 per diluted share for the full year 2011.
Sales for the full year 2012 are now expected to grow in the range of 10
to 13 percent.

First Quarter Performance Summary(in thousands except per share data)

Three Months ended March 31,

Product Line Sales

2012

2011

Change

Off-Road Vehicles

$

504,567

$

388,019

30

%

Snowmobiles

4,647

8,935

-48

%

On-Road Vehicles

64,656

44,908

44

%

Parts, Garments & Accessories

99,880

95,336

5

%

Total Sales

$

673,750

$

537,198

25

%

Gross Profit

$

194,963

$

151,835

28

%

Gross profit as a % of sales

28.9

%

28.3

%

+60 bps

Operating Expenses

$

110,599

$

87,538

26

%

Operating expenses as a % of sales

16.4

%

16.3

%

-10 bps

Operating Income

$

91,547

$

69,583

32

%

Operating Income as a % of sales

13.6

%

13.0

%

+60 bps

Net Income

$

60,078

$

47,310

27

%

Net income as a % of sales

8.9

%

8.8

%

+10 bps

Diluted Net Income per share

$

0.85

$

0.67

27

%

Off-Road Vehicle (“ORV”) sales increased 30 percent from the
first quarter 2011 to $504.6 million. This increase reflects strong
market share gains for both ATV and side-by-side vehicles, primarily
driven by new product offerings, including the recently introduced RANGER
RZR XP4® 900, and increased sales in our military business.
North American consumer ORV retail sales increased mid-twenties percent
for the 2012 first quarter from the first quarter last year, with
side-by-side vehicle retail sales once again increasing significantly
and ATV retail sales increasing double digits percent. North American
dealer ORV inventories for the 2012 first quarter were up slightly from
the first quarter of 2011, as additional side-by-sides were shipped to
meet increasing demand. Sales of ORVs outside of North America increased
15 percent in the first quarter 2012 when compared to the first quarter
2011, due to market share gains and positive mix benefit from greater
sales of higher priced side-by-side vehicles.

Snowmobile sales totaled $4.6 million for the 2012 first quarter
compared to $8.9 million for the first quarter of 2011. Historically,
the first quarter is a slow quarter for snowmobile shipments to dealers.
The North American snowmobile industry finished the selling season in
March 2012 with retail sales down less than five percent compared to the
prior season, in spite of unusually warm weather and minimal snowfall in
many parts of the U.S. Snowbelt regions, whereas Polaris’ retail
snowmobile sales for the season were about even with the prior season’s
results. Polaris led the North American industry in market share gains,
and recorded its highest season-ending market share since 2004.
Season-end North American dealer inventories for Polaris snowmobiles are
higher than last year, but remain manageable given the previous season’s
very low dealer inventory levels. During the first quarter the Company
introduced ten new or significantly updated model year 2013 snowmobiles
with industry-leading innovation, technology and value, including
updated PRO-RMK® models, now lightest in the industry at 417
pounds and an all new version of the legendary Indy model, the new Indy®
600.

On-Road Vehicle sales, comprised primarily of Victory
motorcycles, but also including Indian motorcycles and our GEM and
Goupil electric vehicles, increased 44 percent over Q1 2011 to $64.7
million. Notably, the 2011 acquisitions of Indian, GEM and Goupil
contributed about half of On-Road Vehicles first quarter revenue growth.
North American industry heavyweight cruiser and touring motorcycle
retail sales increased mid-teens percent during the 2012 first quarter
compared to the prior year’s first quarter. Over the same period,
Victory North American unit retail sales increased approximately 40
percent, while North American Victory dealer inventory increased
slightly versus 2011 levels to support these sales and market share
gains. During the 2012 first quarter the Company began shipments of two
new Victory models, the Victory Hard-Ball™ and the new Victory Judge™,
an American muscle motorcycle. Polaris sales of On-Road Vehicles to
customers outside of North America, now including Goupil, increased over
100 percent during the 2012 first quarter compared to the prior year’s
first quarter.

Parts, Garments and Accessories (“PG&A”) sales increased five
percent during the first quarter 2012 compared to the same period last
year. The increase was primarily driven by higher RANGER™
side-by-side vehicle related sales, largely offset by weak snow related
PG&A sales due to the unseasonably warm winter.

Gross profit was 28.9 percent of sales for the first quarter of
2012, an increase of 60 basis points from the first quarter of 2011;
while over the same period gross profit dollars increased 28 percent to
$195.0 million. The first quarter 2012 increase in gross profit dollars
and margin percentage was driven by volume, cost savings from the
manufacturing realignment project, continued product cost reduction
efforts, lower warranty costs, and higher selling prices, partially
offset by commodity cost increases and negative product mix.

Operating expenses for first quarter 2012 grew 26 percent to
$110.6 million or 16.4 percent of sales, compared to $87.5 million or
16.3 percent of sales for the first quarter of 2011. Operating expenses
in absolute dollars for the first quarter of 2012 rose primarily due to
planned strategic investments and increased research and development
activities related to new products under development.

Income from financial services was $7.2 million during first
quarter 2012, an increase of 36 percent compared to $5.3 million in the
first quarter of 2011, largely due to increased profitability generated
from the retail credit portfolios with Sheffield, GE and HSBC.

Non-operating other income was $2.6 million in the first quarter
of 2012, as compared to $3.2 million in the first quarter of 2011. The
change in income stems from foreign currency exchange rate movements and
the resulting effects on foreign currency transactions and balance sheet
positions related to the Company’s foreign subsidiaries from period to
period.

The provision for income taxes for the first quarter 2012 was
recorded at a rate of 35.1 percent of pretax income compared to 34.5
percent of pretax income for the first quarter 2011. The higher income
tax rate for the first quarter 2012 is primarily due to the United
States Congress not yet extending the research and development income
tax credit as of March 31, 2012.

Financial Position and Cash FlowNet cash used for operating
activities was $0.7 million for the first quarter ended March 31, 2012
compared to net cash provided by operating activities of $4.8 million
for the first quarter of 2011. The quarter over quarter change in net
cash from operating activities is the result of higher net income for
the quarter, offset by a higher investment in working capital in the
2012 period, primarily due to the payment of certain accrued
compensation liabilities. Total debt at the end of the first quarter
2012 was $108.1 million. During the 2012 first quarter, the Company
increased its quarterly dividend payment 64 percent to $0.37 per share
and paid a total of $25.3 million in dividends to shareholders. The
Company’s debt-to-total capital ratio was 16 percent at March 31, 2012,
compared to 34 percent a year ago. Cash and cash equivalents were $285.9
million at March 31, 2012 compared to $345.9 million for the same period
in 2011.

Conference Call and Webcast PresentationToday at 9:00 AM
(CDT) Polaris Industries Inc. will host a conference call and webcast to
discuss Polaris’ 2012 first quarter earnings results released this
morning. The call will be hosted by Scott Wine, CEO, Bennett Morgan,
President and COO, and Mike Malone, Vice President --Finance and CFO. A
slide presentation and link to the audio webcast will be posted on the
Investor Relations page of the Polaris web site at www.polarisindustries.com/irhome.

To listen to the conference call by phone, dial 877-706-7543 in the U.S.
and Canada, or 973-200-3967 internationally. The Conference ID is #
65237997.

A replay of the conference call will be available approximately two
hours after the call for a one-week period by accessing the same link on
our website, or by dialing 855-859-2056 in the U.S. and Canada, or
404-537-3406 internationally.

Polaris is among the global sales leaders for both snowmobiles and
off-road vehicles and has established a presence in the heavyweight
cruiser and touring motorcycle market with the Victory and Indian
motorcycle brands. Additionally, Polaris continues to invest in the
global on-road small electric/hybrid powered vehicle industry with
Global Electric Motorcars (GEM) and Goupil Industrie SA, and internally
developed vehicles. Polaris enhances the riding experience with a
complete line of Pure Polaris apparel, accessories and parts, available
at Polaris dealerships.

Polaris Industries Inc. trades on the New York Stock Exchange under the
symbol “PII”, and the Company is included in the S&P Mid-Cap 400 stock
price index.

Information about the complete line of Polaris products, apparel and
vehicles accessories are available from authorized Polaris dealers or
anytime at www.polarisindustries.com.

Except for historical information contained herein, the matters set
forth in this news release, including management’s expectations
regarding 2012 sales, shipments, net income, net income per share,
manufacturing realignment transition costs and savings in logistical and
production costs, are forward-looking statements that involve certain
risks and uncertainties that could cause actual results to differ
materially from those forward-looking statements.Potential risks
and uncertainties include such factors as the Company’s ability to
successfully implement its manufacturing operations realignment
initiatives, product offerings, promotional activities and pricing
strategies by competitors; acquisition integration costs; warranty
expenses; impact of changes in Polaris stock price on incentive
compensation plan costs; foreign currency exchange rate fluctuations;
environmental and product safety regulatory activity; effects of
weather; commodity costs; uninsured product liability claims;
uncertainty in the retail and wholesale credit markets; changes in tax
policy and overall economic conditions, including inflation, consumer
confidence and spending and relationships with dealers and suppliers.
Investors are also directed to consider other risks and uncertainties
discussed in documents filed by the Company with the Securities and
Exchange Commission. The Company does not undertake any duty to any
person to provide updates to its forward-looking statements.